Weekly Credit Summary: July 17
Submitted by Tyler Durden on 07/17/2009 - 18:56Spreads were significantly tighter this week with HY dramatically outperforming IG as tighteners outpaced wideners by over twelve-to-one. LCDX appeared to be the long credit vehicle of choice though as investors moved into the most senior part of the capital structure systemically. High-beta underperformed low-beta names (in large part due to CIT's impact on the tail risk names) as we saw IG, HVOL, and ExHVOL indices considerably outperform intrinsics and widening the skew almost 10bps in IG12.
Interactive Brokers Having A Really Tough Day With Locates, Meg_C Wishes It Was Tomorrow
Submitted by Tyler Durden on 07/17/2009 - 17:16Based upon information available through 14:30 today, we remain unable to locate and borrow / re-borrow the shares necessary to meet delivery obligations on certain short stock positions in your account. As current SEC regulations now strictly enforce delivery obligations, these short stock positions will be subject to forced buy-in by IB should our continued efforts to borrow or re-borrow the necessary shares today be unsuccessful.
Goldman Sachs Principal Transactions Update: Humming Nicely
Submitted by Tyler Durden on 07/17/2009 - 16:56
Goldman principal PT shares transacted increased by over 40% from the prior week: 550 million to 765 million, clocking at near 50% of total NYSE principal volume - about par for the course.
Stop Trading
Submitted by Tyler Durden on 07/17/2009 - 14:25One trader's (to be named as XXX) attempts to understand why his money has to go straight to the big banks' top line following a DDRX buy in courtesy of Interactive Brokers. The following is the record of the chat session that transpired minutes ago.
Goldman's $4 Billion High Frequency Trading Wildcard
Submitted by Tyler Durden on 07/17/2009 - 13:16A recent story in Advanced Trading goes after some of the minutae of High Frequency Trading and provides a glimpse of the total value that HFT may provide to behemoth PT powerhouses such as Goldman Sachs. The article presents a very valuable perspective on just why HFT is so critical these days, especially when cash traders go for 6 hour Starbucks breaks between 10 am and 3:30 pm: "high frequency trading firms, which represent approximately 2% of the 20,000 or so trading firms operating in the US markets today, account for 73% of all US equity trading volume. These companies include proprietary trading desks for a small number of major investment banks, less than 100 of the most sophisticated hedge funds and hundreds of the most secretive prop shops, all of which operate with one thing in mind—capture profit opportunities by being smarter and faster than the closest competition." And as the market keeps going up day in and day out, regardless of the deteriorating economic conditions, it is just these HFT's that determine the overall market direction, usually without fundamental or technical reason. And based on a few lines of code, retail investors get suckered into a rising market that has nothing to do with green shoots or some Chinese firms buying a few hundred extra Intel servers: HFTs are merely perpetuating the same ponzi market mythology last seen in the Madoff case, but on a massively larger scale. When it all blows up, the question is whether the SEC will go after the perpetrators of this pyramid with the same zeal that it pursued Madoff himself. We think not.
CIT To Be Bailed Out By Goldman And JP Morgan
Submitted by Tyler Durden on 07/17/2009 - 11:39Developing Story: I am the great vampire squid's total lack of surprise. So the government and FDIC will not touch CIT, but Goldman and JPM which have tens of billion in dollars owed to the FDIC via the TLGP can bail them out and make it seem like a private bail out? Red pill please. Are all conversations between 85 Broad and Tim Geithner/Sheila Bair over the past 48 hours FOIAble? Also explains the two banks' recent commingled dinning patterns.
Market Plunge Prevention: Friday Lunch Edition
Submitted by Tyler Durden on 07/17/2009 - 11:19Rolling buy-ins compliments of our favorite TARP recipients are back in full force. If you are short, you are screwed. Get out of the market right now.
Goldman Sachs Full Frontal
Submitted by Tyler Durden on 07/17/2009 - 10:55The full scale media war against Goldman Sachs is now on and Mssrs. Canaday and Van Pragg can't hardly wait for the weekend to come already. The most recent exposure comes courtesy of Time Magazine and CBC Radio. The interesting thing here is not the publicity - everyone who is anyone knows all this stuff, and as for Joe Sixpack knowing the facts, well: absent a pitchfork billion man march on Wall Street, nothing will really come out of it. But the key thing to keep track of is whether Goldman will do a placating PR media campaign or merely stay shut in their shell. At this point the media avalanche is in full onslaught mode, and the insightful thing is whether Blankfein thinks it makes sense to preemptively approach the situation. The CEO of GS knows full well that the "full market support mode" will last only so long, and once it breaks and the floor out of the 666 S&P drops, the public will again demand blood (or Trueblood for all you vampire squid fans out there).
A "Criminally Insane" Cliff Asness Takes On Health Care Mythology And Pretty Much Everything Else
Submitted by Tyler Durden on 07/17/2009 - 09:14AQR's Cliff Asness, a hedge fund manager (and ex-Goldmanite) who recently achieved public acclaim by lashing out quite vocally against some of the administration's tyrannical practices, yet stands to lose some of that new found populist credibility by being one of the first "scholars" supporting the petition to limit oversight and visibility of the "independent" Goldman-enhanced Federal Reserve, has just hit the road with another piece of a Hunter S. Thompson-esque Op-Ed.
Jon Stewart Takes On Goldman Sachs
Submitted by Tyler Durden on 07/17/2009 - 08:13Jon Stewart, Paul Krugman... seems like the Mainstream Media is really catching on.
Daily Highlights: 7.17.09
Submitted by Tyler Durden on 07/17/2009 - 07:44Frontrunning: July 17
Submitted by Tyler Durden on 07/17/2009 - 07:40Paging Ben Dover To Provide Taxpayer Funded Workplace Humor
Submitted by Tyler Durden on 07/16/2009 - 21:56It doesn't get more surreal than this. In Federal Solicitation RFI-BPD-09-0028, the The Department Of The Treasury is seeking a contractor to provide... Humor in the Workplace. As there is $800 billion to be spent, what better way than for Tim Geithner to get himself a private court jester (with the market relying on the PPT every day at 3pm to prevent a complete and total meltdown we kinda sympathize with the morose, yet tax-troubled guy). Obama's stimulus doesn't get better than this - you, dear taxpayer, would indirectly fund some guy cracking bad jokes (most likely about the economy and politicians): now that is a way to get the economy started if there ever was one.
The § 1124 Debt Reinstatement Trap
Submitted by Tyler Durden on 07/16/2009 - 20:51An interesting development in some recent bankruptcies has been § 1124 of the Bankruptcy Code, also known as the Debt Reinstatement provision. Recently used in the Spectrum Brands chapter 11, and presumably soon to be attempted in the Charter case, this approach allows "financially distressed companies seeking to use Chapter 11 to substantially delever their balance sheets by equitizing junior debt while “reinstating” existing senior debt on original terms that are more favorable to the borrower than those available in today’s financing market." In other words, this allows the best of all worlds for a bankrupt company: deleveraging due to unsecured debt equitization, while the secured debt continues paying interest at a 2005 Libor rate. With Libor soon to hit negative thanks to the US backstopping all the toxic assets in the universe, and some bufoonery by the ABA, you can bet your bottom dollar that bankruptcy lawyers and financial advisors are pitching default after default even to healthy companies, so they have screw all sorts of creditors.
